New Zealand budget: 'no playbook' for Covid-19 economic recovery, says Ardern

Jacinda Ardern has warned there is “no playbook” to recovery from the Covid-19 pandemic, as her government prepares to unveil New Zealand’s budget in what she said were “the most challenging economic conditions” since the Great Depression.

The prime minister’s remarks followed an announcement that New Zealand had recorded a second consecutive day of no new cases of Covid-19. Ninety-four percent of New Zealand’s confirmed and probable cases of the virus have now recovered, and 21 people have died.

On Wednesday, Ardern – who faces an election in September – defended what she called her government’s “strong health response” as a move that had also been best for the economy. She warned of “a very tough winter,” but added that the government’s response to the global economic shock brought would be to spend rather than make cuts.

“We will run the ruler over every line of expenditure, no question we need to ensure our expenditure provides value for money and supports our primary goal of jobs,” she said. “But the notion that at this time of need we would make cuts to the essential services so many New Zealanders need more than ever is not only immoral, it is economically wrong.”

On Thursday, the country will experience a fresh loosening of the government’s lockdown restrictions, which have been in place with decreasing levels of stringency since late March. Under the so-called Level 2 designation, people can socialise outside their homes for the first time in close to two months, in groups of no more than 10.

More of the economy will restart, with cafes, restaurants and shops due to reopen with physical distancing restrictions in place. Bars will open next week, as well as schools – which have only been open to a select group of pupils whose parents needed to leave the house for work.

Ardern has faced both praise and criticism for her decision to so strictly shut down the country, which her government says prevented thousands of deaths but which her detractors say cost livelihoods that could have been saved with looser rules.

The government’s pre-budget announcements, which have included NZ$4bn for the health system – where shortages and gaps were highlighted by the added pressure of the coronavirus outbreak – and NZ$200m for family violence services.

While her political opponents have sought to paint themselves as the more stable pair of hands to preserve jobs, Ardern promised “a jobs budget” on Thursday.

Opposition leader Simon Bridge warned of higher taxes as a result of increased government spending. “Our worry is that this government will turn a $40bn problem into a $100bn problem with poorly targeted spending and wayward priorities,” he said in a statement earlier this month. “Eventually it all needs to be paid back, with interest.”

New Zealand’s unemployment rate was 4% before the pandemic and Ardern said her government had reduced national debt during its term.

“There is no playbook for the recovery we are about to embark on,” she said. “But nor do we need one.”